National Health Act, 2003 (Act No. 61 of 2003)

Notices

National Health Insurance Policy towards Universal Health Coverage

Chapter 3 : Problem Statement

3.3 Structual problems in the health system

3.3.4 Availability of Medical Products and Technologies
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62. The health sector is facing increasing costs of medical products and technologies. The main cost drivers in the public sector (other than human resources) are: pharmaceuticals; laboratory services; blood and blood products; equipment; and surgical consumables. These cost drivers are wasteful and adversely impact on efficient and effective service provision. Inefficiencies in pharmaceutical supply chain, annual inventory procurement costs, medicine stock-outs, trade-deficits on unaccounted stock, and expired medication are common. Lack of human and electronic inventory management systems and replenishment cycles, data and statistical acquisition37, as well as poor monitoring of hospital support services such as, security, laundry and catering services contribute to these high costs. Whilst efforts are in place to streamline procurement and supply chain management through interventions such as non-negotiables, the fiscal federal public system has not succeeded in optimising costs and availability of medical products and technologies.

 

63. One of the other key cost drivers in the public health sector is the costs of laboratory services. The National Health Laboratory Services (NHLS) has been established as an entity of the National Department of Health and is the main provider of laboratory services for the public sector. It is mandated by its founding legislation and regulations to provide pathology services, teaching and training, and undertaking research. The NHLS receives its funds through fees levied on provinces for laboratory services. The public sector is required to pay for pathology services through a fee-for-service mechanism. Furthermore, the NHLS is required to carry the costs of teaching, training and undertaking research. NHLS has faced several challenges in the recent past as a result of the billing systems used, unnecessary laboratory test requests, and financing training of health professionals through laboratory test tariffs.